LOCAL GOVERNMENT ACT REVIEW PRINCIPLES 1. That State Council endorse a ‘Principles over Prescription’ approach to the Local Government Act Review and actively promote the benefits of the general principles listed below, intended to safeguard against the new Local Government Act becoming overly prescriptive: (a) Uphold the General Competence Principle currently embodied in the Local Government Act; (b) Provide for a flexible, principles-based legislative framework; (c) Promote a size and scale compliance regime; (d) Promote enabling legislation that empowers Local Government to carry out activities beneficial to its community taking into consideration the Local Governments role in creating a sustainable and resilient community through; i. Economic Development ii. Environmental Protection iii. Social Advancement; (e) Avoid red tape and ‘de-clutter’ the extensive regulatory regime that underpins the Local Government Act; and (f) The State Government must not assign legislative responsibilities to Local Governments unless there is provision for resources required to fulfil the responsibilities. 2. (a) Support the continuance of the Department of Local Government, Sport and Cultural Industries as a direct service provider of compliance and recommend the Department fund its capacity building role through the utilisation of third party service providers. (b) Call on the State Government to ensure there is proper resourcing of the Department of Local Government, Sport and Cultural Industries to conduct timely inquiries and interventions when instigated under the provisions of the Local Government Act 1995. State Council Resolution March 2019 – 06.3/2019 December 2017 – 120.6/2017 THEME - AGILE Beneficial Enterprises Position Statement The Local Government Act 1995 should be amended to enable all Local Governments to establish Beneficial Enterprises (formerly known as Council Controlled Organisations). Background This model is available to Local Governments in New Zealand where they are used for a variety of purposes. The model allows one or more Local Governments to establish a wholly Local Government owned commercial organisation. The Association has developed the amendments required for the Beneficial Enterprises model to be implemented in Western Australia. State Council Resolution March 2019 – 06.3/2019 December 2017 – 121.6/2017 October 2010 – 107.5/2010 October 2010 – 114.5/2010 Supporting Documents Beneficial Enterprises Summary (2018) FINANCIAL MANAGEMENT No Rate Capping Position Statement The Local Government sector opposes rate capping or any externally imposed limit on Local Government’s capacity to raise revenue as appropriately determined by the Council. Background The Local Government sector fundamentally opposes ‘rate capping’ based on the following rationale: I. Local Government is a legitimate and essential sphere of Government with the democratically enshrined mandate to raise revenue through rates to fund infrastructure and services for the benefit of their community. II. Councils deliberative rate setting processes reference their Integrated Planning Framework – a thorough strategic, financial and asset management planning process – and draw upon the community’s willingness and capacity to pay. III. Rate-capping prejudices Local Government’s long- term financial management and can, as experienced in other jurisdictions, have detrimental long-term effects on Local Government asset management, with chronic under-rating leading to significant infrastructure maintenance and renewal backlogs. -2- IV. Rate capping places undue pressure on sound financial management at a time when Local Governments are subjected to increasing costs beyond their control, often imposed by other spheres of Government. V. Local Government rates have remained steady for many years at approximately 3.7 percent of GDP in Australia; meaningful tax reform would require thorough investigation of the total taxation burden, not an external cap on Local Government rates. State Council Resolution March 2019 – 06.3/2019 September 2015 – 96.6/015 December 2015 – 118.7/2015 Supporting Documents Rate Setting Policy Statement Financial Management Review – Part 6 Position Statement Conduct a complete review of the Financial Management provisions under Part 6 of the Local Government Act and associated Regulations State Council Resolution March 2019 – 06.3/2019 December 2017 – 121.6/2017 Tender Threshold Position Statement WALGA supports an increase in the tender threshold to align with the State Government tender threshold ($250,000) with a timeframe of one financial year for individual vendors. Background The tender threshold should be increased to allow Local Governments responsiveness when procuring relatively low value good and services. State Council Resolution March 2019 – 06.3/2019 December 2017 – 121.6/2017 July 2015 – 74.4/2015 September 2014 – 88.4/2014 -3- Procurement Position Statement That Regulation 30(3) be amended to delete any financial threshold limitation (currently $75,000) on a disposition where it is used exclusively to purchase other property in the course of acquiring goods and services, commonly applied to a trade-in activity. Background The current limit is $75,000 and this type of activity commonly applies to a trade-in situation. State Council Resolution March 2019 – 06.3/2019 December 2017 – 123.6/2017 Imposition of Fees and Charges: Section 6.16 Position Statement That a review be undertaken to remove fees and charges from legislation and Councils be empowered to set fees and charges for Local Government services. Background Local Governments are able to impose fees and charges on users of specific, often incidental, services. Examples include dog registration fees, fees for building approvals and swimming pool entrance fees. In some cases, Local Governments will recoup the entire cost of providing a service. In other cases, user charges may be set below cost recovery to encourage a particular activity with identified community benefit, such as sporting ground user fees or swimming pool entry fees. Currently, fees and charges are determined according to three methods: By legislation With an upper limit set by legislation By the Local Government. Fees determined by State Government legislation are of particular concern to Local Governments and represent significant revenue leakage because of: Lack of indexation Lack of regular review (fees may remain at the same nominal levels for decades) Lack of transparent methodology in setting the fees (fees do not appear to be set with regard to appropriate costs recovery levels). -4- Examples of fees and charges of this nature include dog registrations fees, town planning fees and building permits. Since Local Governments do not have direct control over the determination of fees set by legislation, this revenue leakage is recovered from rate revenue. This means all ratepayers end up subsidising the activities of some ratepayers. When fees and charges are restricted by legislation, rather than being set at cost recovery levels, this sends inappropriate signals to users of Local Government services, particularly when the consumption of those services is discretionary. When legislative limits allow consumers to pay below ‘true cost’ levels for a discretionary service, this will lead to overprovision and a misallocation of resources. Under the principle of ‘general competence’ there is no reason why Local Governments should not be empowered to make decisions regarding the setting of fees and charges for specific services. State Council Resolution March 2019 – 06.3/2019 December 2017 – 121.6/2017 December 2012 – 133.6/2012 January 2012 – 8.1/2012 Supporting Documents Metropolitan Local Government Reform Submission 2012 Power to Borrow: Section 6.20(2) Position Statement That Section 6.20(2) of the Local Government Act, requiring one month’s public notice of the intent to borrow, be deleted. Background Section 6.20(2) requires, where a power to borrow is proposed to be exercised and details of the proposal are not included in the annual budget, that the Local Government must give one month’s public notice of the proposal (unless an exemption applies). There is no associated requirement for Council to request or consider written submissions prior to exercising the power to borrow, as is usually associated with giving of public notice. Section 6.20(2) simply delays for one month the exercise of power to borrow, and it is recommended it be deleted. State Council Resolution March 2019 – 06.3/2019 December 2017 – 123.6/2017 -5- Restrictions on Borrowings: Section 6.21 Position Statement That Section 6.21 of the Local Government Act 1995 should be amended to allow Local Governments to use freehold land, in addition to its general fund, as security when borrowing. Background Borrowing restrictions in the Local Government Act 1995 act as a disincentive for investment in community infrastructure. Section 6.21(2) states that a Local Government can only use its ‘general funds’ as security for borrowings to upgrade community infrastructure, and is restricted from using its assets to secure its borrowings. This provision severely restricts the borrowing capacity of Local Governments and reduces the scale of borrowing that can be undertaken to the detriment of the community. This is particularly relevant since the Global Financial Crisis. Treasury now requires member Local Governments to show as contingent liabilities in their balance sheet their proportion of contingent liabilities of the Regional